Santos deal a boon for Cooper

Written by admin on 01/07/2018 Categories: 南京夜网

Cooper Energy chief executive David Maxwell says the Santos deal will help in a tightening market. Photo: Michel O’Sullivan Cooper Energy chief executive David Maxwell says the Santos deal will help in a tightening market. Photo: Michel O’Sullivan
南京夜网

Cooper Energy chief executive David Maxwell says the Santos deal will help in a tightening market. Photo: Michel O’Sullivan

Cooper Energy chief executive David Maxwell says the Santos deal will help in a tightening market. Photo: Michel O’Sullivan

Cooper Energy Fairfax Media.

The deal involves a $2.5-million payment by Cooper to Santos for the share in the assets, while Cooper will also fund the first $50 million of design and development costs for the Sole project, Mr Maxwell said. That means an effective purchase price for Cooper of $27.5 million, assuming the project is developed, he added.

Capital investment required to develop the Sole project has been put at about $600 million, including engineering and design work, but that budget is 6-9 months old and will be updated, with the hope of reducing costs in the current low-oil price environment, Mr Maxwell said.

The deal also reduces Santos’s exposure to required capital investment at the project, although the origins of the deal pre-date Santos’s recent advice it would consider asset sales in light of its stretched funding position after the slump in oil prices.

Detailed front-end engineering and design work for the Sole project is expected to be completed in the first half of 2016, with first production from the venture scheduled to get under way in late 2018 or early 2019.

The acquisition will more than double Cooper’s Gippsland gas resources, adding about 100 petajoules to “2C” contingent resources.

Prices for gas along eastern Australia have been rising with the imminent start to production of LNG exports from Queensland, which will more than triple east coast demand.

“Eastern Australia needs new gas supply, gas prices are increasing and we believe the Gippsland Basin resources to be among the most competitive and reliable new sources available,” Mr Maxwell said.

“We are in discussion with gas users who have expressed an interest in Cooper Energy’s Gippsland Basin gas resources and now expect those discussions to broaden with the news that the Sole gas field is moving towards FEED (front-end engineering and design).”

Mr Maxwell said the gas project was relatively protected from the slump in crude oil prices and would actually benefit from falling petroleum industry services costs. Cooper itself, however, currently mostly relies on oil revenues from its production in the Cooper Basin and is reviewing all discretionary spending in light of lower prices.

“Our margins have been reduced but we’re in the fortunate position that we ave a very good cash pile for the size of the company and when assets become available at the right price we’re in a position to move.”

This story Administrator ready to work first appeared on Nanjing Night Net.

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